Facebook looks to mobile app ads to spur revenue

Facebook will allow app makers to pay to promote their apps in the news feed in what could be one way to help solve the company’s mobile monetization problem. Facebook said Tuesday that developers will be able to target a specific audience and set a budget for their ads, which will appear as sponsored apps in a “Try These Apps” unit in a mobile user’s news feed. If a user who doesn’t already have the app clicks on the ad, they will get taken to the Apple App Store or Google Play store.

This is noteworthy because it’s the first time that mobile users will see ads in their feed that are not triggered by their actions or those of their friends. It opens up the news feed as an advertising space that any developer can target, whether or not they have a relationship to a user or not. That may encourage investors who have been worried about Facebook’s revenue plans, especially as more traffic moves to mobile where ad space is limited. And it will likely cheer developers, who continue to look for ways to distribute and market their apps. Developers can sign up here.

Facebook has a huge audience and its mobile users are growing rapidly with more than 543 million users accessing the service from a mobile device each month. With some basic targeting by interests, demographics and platform, Facebook can serve up a pretty good mobile audience to developers willing to pay. This builds upon the work Facebook has done with App Center, which helps recommend apps to users.

But it also raises the question of how much advertising users will accept. Facebook has shunned display ads and instead pushed for sponsored stories that appear in a mobile user’s news feed. But the initial idea was to let advertisers better reach their existing fans through these sponsored stories that were engaging and interesting for users. Now, users will get hit up by developers who they don’t have any relationship with.

The new ads come on the heels of Facebook’s first quarterly earnings report, in which it generally met expectations but didn’t impress. On the earnings call, company leaders stressed the importance of a mobile and said the sponsored stories were generating $1 million a day, half of which was coming from mobile. Now, Facebook has a better shot at improving its revenue picture but the challenge will be to ensure that it can generate more money without turning off its millions of mobile users.